Standard & Poor’s has raised its outlook for Saudi Arabia to positive from stable, citing expectations of strong growth in the non-oil sector and economic resilience, and affirmed the Kingdom’s credit rating at “A/A-1”.
The agency said in a report issued on Friday that the positive outlook reflects the Saudi government’s ability to achieve more reforms and investments, which contributes to developing the non-oil economy.
The credit rating upgrade also reflects the country’s economy’s ability to withstand ongoing volatility in the oil and gas sector.
“We expect to see an acceleration in investments to develop new sectors, such as tourism, and to diversify the economy away from its primary reliance on the hydrocarbon sector,” Standard & Poor’s said.
The agency expected the Kingdom’s GDP to continue to grow during the years 2024-2027, based on the remarkable growth in investments in the non-oil sector, and the rise in consumption rates, in addition to its expectation that the Kingdom will emerge in the long term as a more diversified economy, with more job opportunities for young people.
Saudi Arabia, the world’s largest oil exporter, has announced an economic reform, known as Saudi Vision 2030, to end its dependence on oil in order to achieve more economic growth.
Continued implementation of Vision 2030 initiatives will support strong non-oil growth over the medium term, S&P says.
However, the oil and gas sector and the national oil giant Aramco will continue to play an important role in driving the Kingdom’s oil-related economy.
Inflation in Saudi Arabia has remained relatively low compared to global levels. Standard & Poor’s expects inflation to remain stable and interest rates to move broadly in line with those of the US Federal Reserve.
Last May, Moody’s raised Saudi Arabia’s credit rating in local and foreign currency to “AI1” from “AI2”, citing the increased ability to predict government policies and decision-making processes, which affect the private sector.
